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Douglas E. Johnston

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  • Calumet Specialty Products: Here's Why I'm Staying Long After A Fairly Big Q3 Miss [View article]
    richard48 - could not have said it better myself....
    Nov 8 09:53 AM | 1 Like Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    thanks SkipK - Yes, management is vested and in particular via the GP and IDRs (to keep up the distribution). I would like to see the IDRs bought out or reset into common units - it is tough paying the GP 15mn annual when losing $s and no hurdle. Also, I would like to see price at a level to provide a decent return while distribution is flat and being funded with more debt/equity and commensurate with crack spread risk, which looks to be fundamentally more volatile in the year's ahead.
    Nov 8 09:48 AM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    peminc...thanks for comment. i agree that yield is key but many retail confuse yield with return. one needs to look at how much of yield is coming from depreciation and new financing. As long as you can issue new shares at a premium (i.e., low cost of capital), the model of paying out all CF and issuing shares to grow can work. In my opinion the MLP space, because of its high "yield", throws many investors a curve ball. cheers
    Nov 8 09:43 AM | Likes Like |Link to Comment
  • PetroLogistics: This High Yielder Should Yield A Higher Price [View article]
    right - so maybe they can squeak out a bit more sales ~300 for Q4 based on 89 Oct and need to build safety inv. maybe a 5c hit but spread about 35 for Q4 should give dist ~30c. maybe she swoons a bit into that but would be good chance to sell some puts me thinks
    Nov 8 09:38 AM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    why thank you...
    Nov 7 04:34 PM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    ok ralph - have a nice life
    Nov 7 04:32 PM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    taxman - very good question. I will have to give a more detailed, thought ou,t response another time given the complexities involved. Okay, to be true, i have a tennis match. But my off the cuff says that a yield of 10% would be tops so a price around 28 mid 2015. I wouldn't count distributions over that time frame for reasons I've mentioned - it is all depreciation and reinvestment of capital - so net a 10% (true) total return.
    Nov 7 04:28 PM | 1 Like Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    So Ralph - you trust the transcript which says 50mn vs the presentation which states 15mn....i think a phonetic blunder is the least of your worries
    Nov 7 04:09 PM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    welcome to SA
    Nov 7 02:48 PM | 1 Like Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    giorgiolb - i hear you. I think the refinery space was a favorite of hedge funds who reduced positions (the smart ones) this summer (e.g., blackstone divesting out of PBF). Then the fast money crowd - literally - jumped on the wagon a month ago - probably at the behest of the street to help them get out of risk....and they are running away now. I think 25 is not a terrible entry but I suspect crack spreads can weaken into year-end as specs reverse on euro/$ story
    Nov 7 02:13 PM | 1 Like Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    Richard - I am well aware how MLPs issue shares to grow while paying out all DCF. The issue here was that investors expected the free cash flow that CLMT enjoyed in 2012 to not only pay for their distributions but also the capital expansion (recall, DCF coverage was 2x in 2012). I am sure management also believed a large portion would be funded out of operating cash flow. I do not blame them. That said, expectations have changed to the need to issue more debt/equity than originally anticipated and the shares have to find a new price that reflects no growth in dist. until 2016 and low dcf coverage not to mention risk associated with crack spreads which, until recently, moved in only one direction
    Nov 7 02:07 PM | 2 Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    Ralph - I am well aware how an MLP works in that depreciation is an ROC - why do you think MLPs yield so much? To reward you with such a high yield?

    You clearly do not understand what negative DCF implies.

    As for hedging: See their presentation: They are hedged for 17,752 bpd in 2014 and 15mn barrels of fuel in total thru '16. They sold 128 kbpd in Q3. That is 13.8%. The transcript said (and I quote):

    "At any given time we may seek to hedger up to 75% of our overall fuel production and of September 30, 2013 we have headed approximately 50 million barrels of production through year end 2016 at an average implied crack spread of approximately $27 per barrel. "

    Obviously, you shouldn't believe everything you read, especially when it is being transcribed by Siri

    Do you really think their net income would have declined so much if they were 75% hedged?

    Before you suggest someone does not have a clue, I suggest you review your facts. Otherwise, you leave the impression of a naive investor.
    Nov 7 02:02 PM | 2 Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    Paying unit holders out of depreciation, while still being cash flow positive is fine. My point is you are paying distribution through a reduction in unitholder equity beyond depreciation. You can see it in last quarters #s. Unitholder equity (what you own!) went down 78mn which is roughly 34.3 depreciation plus 47.7 distribution. So you are being paid out of share holder equity beyond depreciation. That is to say, you are losing principal
    Nov 7 11:57 AM | 2 Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    Combined both San Antonio projects will bring $16mn in ebitda in '14. That is really small potatoes when you think of dakota and montana which are combined cost of ~500mn. For me, I was concerned that Montana was delayed and cost increased. Yes, ebitda will come someday, but issuance is required to fund.

    Look at the sales #s over last two quarters. They were not affected by turnaround as inventory was accumulated beforehand and other capacity was used. Sales were up 11% sequentially but margins down.

    As for RINs, I have them declining and crack spreads widening in '14 10% over '13. So I believe I am conservative with respect to their financing needs.
    Nov 7 11:06 AM | 2 Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    i think the price drop has much to do with the ECB decision and the market view that it is an effort to cheapen the euro. Brent is more linked to euros and WTI to $s so US refiners are implicitly long euros/$

    If you read the transcript, the CFO specifically states that they will need the capital markets to fund '14.
    Nov 7 11:00 AM | 3 Likes Like |Link to Comment
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